A federal securities class-action lawsuit has been filed against national online mortgage lender Better Home & Finance (commonly known as Better), its controversial founder and former CEO Vishal Garg, and its current CFO Loveen Advani. The suit alleges that Better violated federal securities laws by knowingly misleading investors about the company’s potential monthly loan volume and by downplaying the impact of macroeconomic conditions, which ultimately led to a significant stock decline this spring.
Filed on Sept. 21 in the U.S. District Court for the Southern District of New York by shareholder Richard Gastwirt, on behalf of himself and others similarly situated, the complaint is based on a review and analysis of the company’s regulatory filings with the U.S. Securities and Exchange Commission (SEC), press releases and media reports distributed by Better, and other publicly available information about the mortgage lender. The case is being handled by attorneys from national class-action firm Hagens Berman, which has gained notoriety through its involvement in antitrust lawsuits against the real estate industry.
The proposed class, which the filing indicates could include “at least hundreds of thousands” of members, would be composed of investors who purchased Better securities between March 13 and May 7, 2026, a timeframe in which the stock was allegedly artificially inflated based on misinformation from Better and its executives. The plaintiff alleges that statements made in conjunction with Better’s Q4 2025 earnings report, along with its public guidance for reaching $1B in monthly funded loan volume, were “materially false and/or misleading” and that the company failed to disclose “that the Company’s conversion funnel was already slowing due to macro factors.”
According to the filing, a press release regarding its Q4 2025 earnings, issued by Better on March 13, 2026, stated that “Funded Loan Volume grew 56% year over year versus industry growth of 4%, while revenue grew 77% year over year.” The release also affirmed “$1.0 billion in Monthly Loan Volume by the end of May 2026.”
A quote from Garg in the March 13 release read, “We are seeing growing inbound interest from brokers, banks, and non-bank lenders following our recent partnership launches. Our integration with ChatGPT is also opening a new distribution channel for the Tinman AI platform, and we are actively working with prospective partners to integrate Tinman into their workflows.”
Garg backed up the press release’s claims during a Q4 2025 earnings call that same day when he told investors, “(w)e remain on track to reach $1 billion in monthly volume by May 2026 and to reach adjusted EBITDA breakeven by the end of the third quarter 2026.” According to Hagens Berman, Advani assuaged investors about troubling economic indicators during the call, saying that “Better continues to generate opportunities independent of broader economic and mortgage market conditions” and that the company has “demonstrated the ability to grow regardless of macro conditions.”
Better changed course, however, during its May 7, 2026 investor call to report Q1 2026 results when the lender slashed its monthly $1B loan volume projection and told shareholders to expect slower quarterly loan volume, targeting a revised, much lower $550M monthly sales volume. During the call, Garg said he wanted to be “direct with investors,” reporting that “conversion rates are down from where they were in Q1″ and that “customers are not converting at nearly the same rate.”
“The timing on when we achieve our $1 billion monthly funded volume target will depend in part on the rate environment,” he said. “It looked highly doable this time last month. And right now, sitting for this month, it looks like it’s going to be deferred.”
This news precipitated a 28.5% drop in Better’s stock price on May 7.
The lawsuit also claims that the defendants “acted with scienter,” in other words, that they intentionally deceived shareholders. According to the filing, statutory safe harbor rules designed to protect a company’s forward-looking statements do not apply in this case as “The statements alleged to be false and misleading herein all relate to then-existing facts and conditions” and were not identified as forward-looking when made: “…there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially.”
Better did not immediately respond to a request for comment, at press time.
On Aug. 3, 2026, Garg stepped down as CEO, with board member Daniel Lewis assuming the role of interim CEO. According to the filing, Garg is expected to continue to serve on the board and “assist with the transition.”
Garg continues to remain embroiled in a struggle over Better’s leadership. In various social media posts and media appearances after his ouster, Garg accused the board and Lewis of deceiving him and threatened to stage his own coup. He offered to work for $1 a year, and claimed that stockholders support his return bid—something Better disputed.
“Mr. Garg has aggressively solicited shareholders in an effort to secure their support and has done so by misrepresenting facts and in a manner that clearly violates federal securities laws,” Better said in a release at the time. “Despite this improper and unlawful solicitation, Mr. Garg does not have the votes required to implement his boardroom coup.”
This is a developing story. Stay tuned to RISMedia.com for updates.
